Editor’s note: This feature originally appeared in the March issue of DS News
The tech revolution in mortgage servicing continues, challenging our industry to continue evolving to keep pace. As the next decade unfolds, we will be presented with both fresh challenges and ever greater opportunities.
Here’s the catch: If your strategic vision doesn’t encompass these critical areas of technology, that vision will remain blurry and incomplete.
Rest assured, your competitors are factoring tech into their plans. According to research by global market intelligence firm International Data Corporation (IDC), organizations around the world are accelerating their investments into enterprise technology platforms. Mortgage servicers need to improve connections with customers, address the increasing demands of privacy regulations and security needs, and stay competitive.
- Prioritize the Cloud
The financial services industry has historically been risk averse, and the adoption of “cloud” and Software-as-a-Service (SaaS) technologies has taken a while to gain traction. Time has slowly changed that perception, however, and today many servicing organizations are strategizing with a cloud-first mentality. According to a recent Accenture Financial Services survey, 97% of respondents said they had a cloud strategy, or were in the process of forming one.
Emergent technologies such as the ones on this list will increasingly compel servicers who remain risk-averse to reconsider their options. Leveraging managed services in the cloud to bolster security and efficiency will allow the industry to discover value in outsourcing the management and hosting of infrastructure such as:
- backing up data
- implementing the latest security measures
- maintaining and updating solutions to ensure compliance with national and international regulations
- scaling solutions as data needs fluctuate
- ensuring disaster recovery
Cloud computing is the future across multiple industries and disciplines, and mortgage servicing is no exception.
- Embrace Regtech
Mortgage servicers face a complex, ever-expanding regulatory landscape. Keeping up with those changes is an expensive and time-consuming task. Consider that, according to a Global Regulatory Outlook 2018 by Duff and Phelps, most financial institutions are committing 15% of their employees and 10% of their annual revenue to staying compliant with the complex regulatory web.
Failing to remain compliant can impact both the business and its customers, putting a strain on company time and the bottom line. This can lead to fines, litigation, licensing implications, and damage to the corporate brand.
In order to succeed, servicers are turning to regulatory technology to help solve these compliance challenges. Regtech employs innovative technology solutions to reduce costs by decreasing the time spent on compliance matters and the fines that can result from non-compliance.
Other regtech benefits include:
- automating compliance processes
- acting as a source of internal governance
- providing transparency and risk management through reporting
- reducing the need for manual intervention
- enabling better data analysis to quickly identify and remedy risks
- Begin With Blockchain
As business processes generate more and more data, and digital transactions increase, the need for transparency and authenticity will continue to grow. Blockchain has emerged as a viable way to provide those assurances across industries.
Blockchain is often primarily associated with bitcoin, ethereum, litecoin, and hundreds of other cryptocurrencies. Since its inception, however, technology vendors have been gradually expanding their visions for their own solutions to include the use of blockchain. During a lending approval process, for example, lenders could use blockchain to validate information such as title deeds, loan packages, and property evaluations from third-party providers—all in one place via the distributed ledger.
“Blockchain technology may radically alter the process through which consumers buy a home, as well as the way financial institutions handle mortgages,” stated a recent PwC report. “Specifically, the technology could remove cost and friction from the process, create transaction records that are infallible and incorruptible, and facilitate near-instantaneous settlement.”
Blockchain is poised to play an important role in both lending and servicing processes going forward, helping to ensure error-free, trustworthy data.
- Strengthen Customer Data Solutions
Customer experience is quickly becoming the key competitive differentiator, in both mortgage servicing and other outside industries. Keeping customers engaged is all about their experience, and that ties back to consumers controlling that experience. So, what do consumers want? Two things, according to a survey commissioned by Equifax: utility and choice.
Regarding utility, Forrester says consumers are looking for the best way to complete a specific task, such as refinancing a mortgage or applying for a new loan. They’re looking for simplicity and ease-of-use, and if they enjoy the experience, they often stick with the brand for other services.
However, consumers are also willing to engage with other lenders and servicers for other products, or even switch brands if they find a better experience. More than 40% of consumers, according to the survey, feel more secure if their monetary obligations are spread between servicers.
This presents both challenges and opportunities for the mortgage industry. A robust content services strategy can give you a head start.
Content services platform providers offer integrated sets of content-related services, microservices, repositories, and tools that support common content use cases. These content services can include:
- document management
- intuitive search
- intelligent capture
- automated classification
- version control
- business process automation
- case management
- records management
- content analytics
Content services platforms can help you build the foundation for a 360-degree view of your customer. This can provide valuable insights into opportunities to up-sell or cross-sell to your customers, what campaigns you can run, and how to best track them.
Provide the right customer experience and you can better attract consumers away from the competition and ensure that current customers remain engaged. Just remember—your competition is working toward these same goals.
- Leverage Dynamic Digital Tools
Dynamic digital business tools such as robotic process automation (RPA), intelligent automation (IA), and machine learning (ML) will help shape the path forward for many businesses in the decade to come.
RPA is the deployment of software robots to significantly reduce the time, resources, and errors associated with tasks that require workers to change focus between screens, systems, and third-party information sources such as websites. IA is the combination of automation and artificial intelligence. At its most basic, IA takes a “doing” role, focusing on automating tasks. At its most complex, IA takes a “thinking” role, focusing on data-driven work that requires deduction and analysis.
IA technology is already changing the way lenders and customers interact. Some lenders are applying RPA to processes in which employees manage simple, repetitive tasks that do not require analysis.
- Chatbots can build customer engagement by answering customer questions and making recommendations.
- Analyst Bots detect fraud and help manage risk via portfolio and transaction, completing these actions much faster and more accurately than humans.
- Compliance Bots provide real-time tracking of laws and regulations.
The efforts of these bots are adding up. According to a Juniper Research report, chatbot technology will deliver $11 billion in annual cost savings for financial organizations by 2023.
- Engage Your Tech Ecosystems
By embracing digital transformation—replacing or optimizing legacy systems, adopting a robust content services platform, and building innovative solutions that expand the customer experience—you’re establishing a technology ecosystem.
With that ecosystem in place, you can start leveraging customer data to better understand the needs of your customers and discover when to make the right product offer at the right time.
While prospective customers and current clients are likely to research mortgage lenders and servicers online, eventually they will want to talk to a real person and engage with someone who understands their personal goals. If they are already your customer, there is some expectation that you will understand their wants and needs and will partner with them to achieve a broader plan, not just execute a transaction.
By creating a technology ecosystem and turning information into customer interaction, servicers will be able to build a more sustainable relationship with the customer.
- Utilize Tech as a Customer Loyalty Tool
Expanding technology has brought with it the expectation for rapid response in every interaction, and mortgage servicers must therefore speed up processes to improve both employee and customer experiences.
In the past, organizations pursued operational efficiency in order to reduce costs and improve productivity. While those drivers remain, organizations are streamlining processes as a means of improving those experiences to increase loyalty both internally and externally.
In a subscription-driven world where adoption is the currency of the day, retaining customers is key. Content services technology plays a critical role in the quest to deliver better interactions internally and externally. That’s why, throughout the year, organizations will continue to expand their strategic use of content services to deliver better experiences and improve customer loyalty.